Strong cotton demand is driving the price
The 79th plenary session, “Fortifying the Cotton Supply Chain: New Approaches to New Challenges,” of the International Cotton Advisory Committee (ICAC) began today.
Cotton prices at the current level may last during the 2021/22 season, but chances of going beyond the current higher levels are not there, stated Mr. Matthew Looney, Data Scientist, ICAC.
With production higher in the United States and Brazil, going into 2021/22, stocks are available to satisfy the demand.
With the holiday season ahead, there will be demand enhancement for cotton and textile products. But factors such as supply chain bottlenecks, the emergence of the Omicron variant, may affect consumer buying.
“If we have demand increase, stocks will be there,” added Mr. Looney. In talking recently to a veteran cotton purchaser for a major textile mill in India, mills are expecting leveling of cotton price. Mills are cautiously buying cotton say for 10-day production needs and hoping that new arrivals will bring down the price in India.
“Prices cannot remain high,” stated Lorena Ruiz, Economist at ICAC. When prices crossed 90 cents range in previous seasons, prices came down in the following seasons added Ruiz.
Countries like Vietnam, Bangladesh have increased textile manufacturing and hence demand for cotton.
While demand is still driving the price, given the stock levels, price levels may remain at the current level but hoping for a higher level may not be feasible. However, it is not precisely possible to predict how prices may trend given the supply-demand situation.